Capping Rental Application Fees at $5

States have taken a range of approaches to rein in rental application fees, with interventions generally falling into three main categories: limits on costs, “portability” reforms, and crackdowns on unfair practices.

1. Limits on costs

Several states have adopted laws that cap application fees at a certain flat amount, tie fees directly to landlords’ actual screening costs, or—in the case of Massachusetts and Vermont—prohibit application fees altogether. While these policies can serve as a check on what renters pay up front, they also have real limitations. Applicants typically have no way of knowing what tenant screening companies actually charge landlords and in turn what they should be charged, and in states with fixed fee limits, caps often anchor rates—functioning as a floor rather than a ceiling on permissible charges. In states that ban these fees outright, weak enforcement and somewhat ambiguous statutory language mean the rules are sometimes ignored in practice.

A CAP analysis* of dozens of housing providers across four states, each of which have distinct rules for capping fees, illustrates the shortcomings of each approach:

• In Wisconsin, which caps fees at landlords’ actual cost of conducting a consumer credit report, up to $25, four of the 15 apartment complexes CAP studied charge less than the permissible rate, five charged exactly $25, and six charged more than the allowable rate.
• In Washington, where landlords are permitted to charge only up to the actual cost of screening services, rental application fees ranged from $22 to $66.
• The two states with outright bans had different rates of success. Vermont statute dictates that housing providers “shall not charge an application fee to any individual in order to apply to enter into a rental agreement.” However, CAP analysis found that nearly half of the sampled properties charged nonrefundable fees of up to $25 for “credit and background screening.” Massachusetts, which bans any fees associated with applying for a rental unit prior to tenancy, appears more effective: Just one of the 15 developments studied charged a fee.

2. Portability reforms

A growing number of states have adopted “portability” laws that allow renters to reuse a recent tenant screening report when applying to multiple apartments. In theory, this should allow them to avoid repeated application fees, but in practice, they often see limited savings. These rules are often circumvented. In Colorado, for instance, landlords are supposed to waive application fees when a renter provides a qualifying portable screening report, yet some property managers have adopted practices that sidestep the requirement or discourage applicants from attempting to use such reports in the first place. Portability laws also place significant burdens on renters, as they often receive little guidanceon how to obtain a qualifying report or how to submit it to landlords, and many states provide limited notice to renters about their right to use these reports. Even when they are aware of the option, they may have difficulty finding a report that meets their state’s legal requirements. Together, these hurdles make portable screening reports hard to use in practice, undermining the well-intended goal of reducing repeated fees.

3. Crackdowns on unfair practices

Finally, some states now prohibit landlords from charging application fees for units that are not actually available, require that screening checks be performed if a fee is collected, and mandate refunds when screenings are not run. For example, California requires landlords to provide an itemized receipt, and to return the fee if no screening is conducted. Colorado requires landlords to disclose anticipated screening costs in advance and to refund any amount not actually used to obtain a report. And Minnesota prohibits landlords from collecting an application fee when no rental unit is available and requires them to refund screening costs if an applicant is not screened. These policies can be meaningful, though as with the other approaches described above, they are only as strong as their enforcement, which in many cases remains spotty or reliant on extraordinary effort by impacted renters to determine whether a landlord did in fact conduct a screen and what it cost.

Americans should not have to pay hundreds of dollars just to apply to rent a home. CAP proposes capping rental application fees at $5 per applicant—a single, all-in figure to cover everything a landlord may charge in connection with an application. This would establish a bright-line rule that is widely understood and easily enforced.

Congress could pass legislation to set a firm limit on the amount that can be charged for tenant screening; there is precedent for this, as federal law already limits prices in other transactions. For example, regulations under the Credit Card Accountability Responsibility and Disclosure (CARD) Act of 2009 capped credit card penalty fees at $25 for the first late payment and $35 for subsequent late payments, adjusted for inflation. A flat cap of this kind would directly address the shortcomings of existing state approaches by minimizing out-of-pocket costs for renters rather than setting a ceiling that can often become a floor. It would also cut through the information asymmetry that enables landlords to charge more than what screening companies charge them, since renters would no longer need to know—or contest—the underlying cost. And it would replace portability rules, itemization requirements, and refund procedures with a single, easy-to-understand number that any enforcer could verify.

Federal agencies could also take action administratively. While potentially less sweeping and durable than congressional action, such steps would allow agencies to limit rental application fees and crack down on unfair practices that burden renters in the application process. Under its authority to prohibit unfair or deceptive practices, the Federal Trade Commission could determine that excessive rental application fees are unfair, including fees charged when no unit is available or when a landlord has already selected a tenant. It could also find that repeatedly charging applicants for materially identical screening reports, or refusing to accept a recent equivalent report, is an unfair practice.

Further, the Federal Housing Finance Agency (FHFA) could cap rental application fees in Fannie Mae- and Freddie Mac-backed multifamily properties as a condition of financing. The FHFA has previously used this mechanism to impose tenant protections—for example, requiring landlords in Fannie Mae- and Freddie Mac-backed properties to provide 30-day notice of rent increases and lease expirations, as well as a five-day grace period for rent payments.

Critically, any federal cap should be paired with robust enforcement—ideally through a combination of active federal agency enforcement, state attorney general actions, and a private right of action that allows individual renters to seek relief directly without relying on agency resources. Because actual damages from a single excessive application fee are often relatively small (typically tens of dollars), effective private enforcement would require statutory damages, including a fixed dollar amount per violation.

Amid a nationwide housing affordability crisis and with few options to address sky-high rents immediately, setting application fees at $5 would allow policymakers to quickly lower costs for cash-strapped renters and enable greater mobility to better homes and neighborhoods, while addressing landlords’ legitimate concerns.

Reforming rules around rental application fees would lower costs for renters, in some cases substantially. Consider the following example: If a couple applies to six apartment units at $50 per person per application, the total cost is $600. Under a $5-per-person cap, that same search would cost just $60—a savings of $540. It would also lower costs for renters by reducing the incidence and impact of unfair practices. Landlords would be less likely to collect applications for units they have little intention of renting or from more applicants than they can realistically consider if they could no longer recoup the cost—or turn a profit—each time they do so.

Some may argue that landlords would respond to this policy by raising rents. But given that landlords would bear only a small additional cost per application, it is unlikely that they would pass that cost on to renters, particularly in competitive rental markets where tenants are highly price sensitive. In the United Kingdom, the 2019 Tenant Fees Act eliminated most tenant-paid application and administrative fees, saving renters roughly 400 pounds per move and nearly 1 billion pounds overall. Importantly, independent research found little evidence that the reform led to higher rents. Similarly, in other policy contexts in the United States, limits on fees have not led to meaningfully higher costs for consumers overall. For example, following supervisory pressure and rulemaking from the Consumer Financial Protection Bureau during the Biden administration, many large banks reduced or eliminated overdraft and nonsufficient funds (NSF) fees; overdraft/NSF revenue fell by $6.1 billion between 2019 and 2023, while account maintenance and ATM fees remained flat—suggesting banks did not make up the difference by raising other checking account charges.

Beyond direct savings, reducing per-application costs could have outsize impacts on economic opportunity. Because rental applications function as a per-attempt tax on housing searches, lowering the price encourages broader searches, improves matching between tenants and units, and makes it easier for households to seek out better jobs, neighborhoods, and schools. Removing a small but repeated up-front expense also reduces a liquidity barrier that disproportionately affects younger renters and families with limited savings. In addition, a lower fee cap would also expand options for renters who face the steepest barriers, including those with limited credit histories or past financial hardships, who today often limit their searches to housing they expect to accept them, rather than risk paying repeated fees only to be rejected. A lower fee cap could also make it easier for tenants to escape unsatisfactory or unsafe conditions—situations where renters are effectively stuck as conditions deteriorate and rents increase rapidly.

Finally, this proposal is sensitive to reasonable property owner concerns. Landlords have a legitimate interest in choosing tenants who will reliably pay rent and abide by the lawful terms of their lease. While a credible case can be made for banning application fees outright, by retaining a small fee the proposal acknowledges a common reason cited by landlords for charging application and other screening fees: to filter out fraudulent or nonserious applicants who could impose costly administrative burdens. The concern that eliminating fees could invite frivolous applications is likely overstated, however, as rental applications require applicants to compile pay stubs, references, and personal financial information—a time investment that effectively deters casual interest. And while CAP’s proposed policy would modestly shift costs toward landlords, they are better positioned to absorb predictable business expenses than applicants facing limited liquidity during a move. Just as landlords expect to incur costs around repainting walls or addressing other wear-and-tear when turning over an apartment, they could plan to cover the modest expense of assessing potential tenants. Over time, the per-application cost may also decline, as landlords would for the first time become price-sensitive buyers of screening services.